The recent stock market headlines, have been filled with large stock market losses. With those headlines come the predictable wave of financial service industry jargon.
“Think long term.” Buy-and hold.” And my all-time favorite, “This is just another buying opportunity.”
The financial media is as predictable as it is general in times of stock market upheaval. Tired and useless headlines and quotations are intended to divert your attention away from taking the necessary investment management steps to preserve the last several years of your company 401(k) retirement plan investment gains.
You have to sell something in order to preserve your company 401(k) retirement plan principal. Why then do all financial services industry professionals quoted in the financial media want you to do nothing? Their advice is for you to stay put; regardless of the obvious direction of the U.S. economy and stock market.
Individual stock market investors are always supposed to be long-term investors. A long-term buy-and hope investment management strategy is constantly promoted to company 401(k) retirement plan participants. I read that fact in the financial media.
There is one big problem with long-term stock market investing in your company 401(k) retirement plan account. The problem is that the U.S. stock markets don’t cooperate.
During the last great stock market decline from summer 2008 to spring 2009, the U. S. stock market fell in the range of 45-55%. It took several years for long-term stock market investors to recover their original account values.
There are no long-term stock market investments in this day and age. The world’s social, economic, and political cycles prevent a buy-and-hold strategy on multiple levels.
Right now, you should not be taking any more stock market risk than you are completely comfortable with. The vast majority of individual company 401(k) retirement plan participants should take step to preserve their last few years of stock market gains.
Very important company 401(k) retirement plan investment management decisions demand your full attention now. History will tell you that buy-and-hold should not be the central focus of that decision.
Ric Lager
Lager & Company, Inc.
